Life expectancy has increased, so income planning and support over the long term is becoming more important. Thinking about what could support someone and bring them peace of mind and security right throughout their retirement is crucial.
Pension Annuity is a lifetime annuity which pays your client a regular income, guaranteed for the rest of their life.
Your client can tailor the income to meet their needs, so they'll know exactly what they'll be receiving and when. Options could include;
- Your client may receive a higher income, also known as an enhanced income, if they have certain health or lifestyle conditions, such as smoking and being overweight.
- An option to have income which increases annually to protect against inflation.
- A range of death benefits to provide income for dependants in the event of your client's death.
- Clients can choose payment frequencies to be monthly, quarterly, half yearly or yearly; in advance or in arrears.
A Pension Annuity is suitable for clients who:
- Are aged 55 and over.
- Want a guaranteed income for life.
- Don't want their pension to be subject to any investment risk.
- Want to buy annuities in stages to make up a reduced wage or salary.
- Want to manage their income to maximise tax efficiencies.
- Have a pension pot of at least £5,000, after any tax-free cash and an adviser charge, if applicable.
Pension Annuities can:
- Provide an income for your client as well as what they receive from a State Pension.
- Help your client who is concerned about inflation and would prefer an income which increases annually.
- Reduce the investment risk of some or all of your client's pension pots.
- Be used as part of a phased retirement, partially buying annuities to reduce investment risk on pension pots gradually.
- Provide death benefits such as spouse's pension or a guaranteed minimum payment period.
There are risks to your client too. They include:
- Your client could lose money - pension annuities don’t have a ‘cash-in’ value and the total income paid from your client’s annuity could be less than the amount they used to buy it. A guaranteed payment period and/or dependant's pension can be added to reduce this risk.
- Timing - the amount of pension income we’ll offer your client will be based on our annuity rates at the time. If they buy when rates are low, their income will reflect this.
- Inflation - price inflation can reduce the real value of your client’s income over time, which could mean that it doesn’t stretch as far in future years.
An increasing income can reduce this risk
- It's a once and for all decision. Once their annuity is in payment your client can't change any of their payment options, even if their circumstances change.
- Deteriorating health. The pension income we offer your client will be based on the information they provide when they apply. If their health subsequently deteriorates, we won’t be able to increase their income.